News
15 May 2008
Tertiary education institutions
A legislative clarification means that state-funded tertiary education institutions will not have to register with the Charities Commission to retain their tax-exempt status.
Inland Revenue propose to amend the Income Tax Act and the Estate and Gift Duties Act to clarify that tertiary education institutions are exempt from income tax and from gift duty. The provision will apply to institutions set out in the Education Act: universities, polytechnics, specialist colleges and wananga.
The proposed changes will also ensure that these tertiary institutions automatically have Inland Revenue-approved donee status so that people who donate money to them will continue to qualify for tax rebates for their donations.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
State and state integrated schools
State and state integrated schools do not need to register with the Charities Commission to be exempt from income tax because they already have a specific exemption in the Education Act.
Inland Revenue propose to amend the Estate and Gift Duties Act to provide that gifts to state and state integrated schools are exempt from gift duty.
Under the proposed change, they will also have automatic IRD-approved donee status, so that people who make cash donations to them will continue to qualify for tax rebates.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
Non-resident charities
Inland Revenue propose to amend the Income Tax Act to ensure that non-resident charities that cannot register with the Charities Commission because they are not established in New Zealand or have no strong connection with New Zealand will be able to have tax-exempt status here, subject to Inland Revenue approval.
Inland Revenue also propose to amend the Estate and Gift Duties Act to provide that gifts to non-resident charities will be exempt from gift duty if they are unable to register with the Charities Commission.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
Are there circumstances beyond your control that prevent you from applying before the 1 July deadline in order to preserve your tax-exempt status?
Inland Revenue have proposed a change to the Income Tax Act for charitable organisations that run into difficulty with completing their registration application before 1 July 2008. This measure will help those charities that qualify for registration under the Charities Act to retain their tax-exempt status for any period they are unregistered.
The proposed legislation will provide a limited discretion for the Commissioner of Inland Revenue to preserve the tax-exempt status of charities that were not able to apply to register with the Charities Commission before 1 July 2008, but who can prove they began the process of preparing their application before that deadline.
The measure is to provide greater tax certainty to organisations that run into difficulty in preparing their applications, owing to circumstances that may be beyond their control. It will not cover organisations that merely have not got round to applying for registration before the deadline.
Guidelines about what will be required by Inland Revenue to provide proof of having begun the process of preparing an application for registration will be published on Inland Revenue’s website when available.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
It’s well and truly time to get your application in!
If you are already registered under the Charities Act, congratulations!
If you have not yet applied, remember that there are now only weeks left until tax laws change. It’s important to get your application in as soon as possible.
If you know of any charities that haven't yet applied, and who are likely to be eligible, we’d really appreciate it if you could encourage them to apply as soon as possible. That way they won’t risk missing out on charitable-purpose tax exemptions after 1 July 2008.
Remember, getting your application in now means that you are more likely to avoid any uncertainties about your ongoing charitable-purpose tax exemptions after 1 July. Although we can backdate applications that qualify for registration (to the date we receive the application), it's much better to get in now!
Backdating
Did you know that we have powers to backdate applications?
We can backdate properly-completed applications (to the date we received them) as long as we are satisfied that the applicant met all our criteria between the date they applied, and their registration date.
A “properly completed” application must include:
- a set of rules
- at least one Officer Certification form
- a certified application form
For more, see our information sheet – Backdating of registration applications
Already registered?
Charities registered under the Charities Act each have a unique registration number. The Commission encourages you to publicise your registration number, and refer potential donors and supporters to your information on the Charities Register.
For more information, see our Guidelines for promoting your unique registration number.
Common application errors
We may need to write to you if we don’t have enough information to register your organisation under the Charities Act. Here’s an insight into the types of letters we send to applicants and why.
Letters indicating the application is incomplete
We cannot consider an application for registration until it is complete. The most common reason for sending these letters is when we receive incorrectly completed Officer Certification Forms (Form 2). Common errors include:
- leaving the certification box blank on page 2
- sending us only page 1 of the form (we need pages 1 and 2)
- a discrepancy between the number of Officer Certification Forms provided and the number of officers specified in answer to question 23 in the application form. (e.g. if you list four officers, you must send four completed forms).
Letters that relate to section 18(3)(a) of the Charities Act, asking for detail relating to your activities
Some organisations’ rules have object or purpose clauses that are very high level and all-encompassing. While it is clear that the organisation has a charitable purpose, it is not clear how their activities might benefit the public.
Letters entitled “Notice that your charitable purpose/name/officers may lead to a decline of your application for registration”
These letters indicate that we have fully considered an application, but there is insufficient evidence in the material supplied to approve registration. Such letters are rare and normally relate to an organisation’s charitable purpose. Receiving one of these letters does not necessarily mean that your application will be declined. Applicants are provided with a reasonable amount of time (usually 20 working days) to make a submission to the Commission.
For media enquiries, please contact:
Sandra Bennett , Communications Manager
Phone: 04 978 7782
email: Sandra.bennett@charities.govt.nz